If June offered a glimpse of the pressure building at the pump, Q2 showed us the messy, unpredictable and tougher-than-expected bigger picture.
It all started with a slide. Oil prices dropped more than 15% in April as global trade tensions flared up again. But by mid-June that trend had flipped. Conflict in the Middle East escalated and crude prices surged 17% almost overnight.
The market moved quickly but retail margins didn’t.
Oil Moves Fast. Margins Move Slower.
There’s a common belief in fuel: when oil moves, the pump reacts. But Q2 proved again that it’s not that simple. Retailers aren’t buying barrels of Brent; they’re buying refined products, passed through a supply chain full of friction.
In June alone, replacement costs rose by around 5%, but margins didn’t rise to match. In some parts of the UK, they fell by as much as 18%. This wasn’t about chasing volume by cutting prices; it was plain and simple margin erosion.
The Pressure’s Coming from All Sides
Margins weren’t the only thing under pressure. Retailers are navigating a new reality with employer costs rising, insurance premiums on tanker routes creeping up, and disposable vapes (a once-reliable high-margin product) off the shelves.
Add to that the uncertainty surrounding the CMA’s upcoming Fuel Finder scheme and the sector is left trying to maintain customer trust, with very little clarity on what comes next.
Some Good News: Demand Held Up
Despite it all, the quarter showed signs of resilience. Volumes were up across all regions. More people came to the pumps and average fill sizes increased. That kind of behaviour suggests confidence and highlights that people are still on the move – commuting, delivering, visiting, holidaying – and that business fleets are still rolling.
But resilience doesn’t mean immunity. Despite the demand holding up during this period, the rising wholesale costs along with the fixed operational overheads mean that it was retailers who took the hit during this quarter.
Crude Economics and Cruder Realities
Q2 delivered a textbook lesson in how volatile oil markets can be and a sharp reminder that strict logic doesn’t always apply.
Oil prices matter, but sustainable margins matter more in the long run. And the things shaping those margins today? It’s not just supply and demand. It’s supermarket competition, rising wages, disappearing product categories, as well as infrastructure and regulation.
Want a clearer picture of the volumes and margins across the UK? Download the full Q2 2025 report for more information here.
